From KERA News:
When 43-year-old Silvia Perez took out a $1,500 loan against her car title, she had one goal; take care of her soon-to-be-born grandson.
“Bassinet, Pampers, small clothes, you know, whatever the baby was lacking at the time,” she says.
Perez doesn’t have a credit card, and was short on cash, so a 30-day auto title loan seemed like the only option. The interest rate, or APR, was 315 percent. Perez didn’t realize what that meant, and figured she’d be able to pay off the loan fairly quickly.
“I was like, yeah, I’m going to get out of this,” she says. “And then I was like, no I’m not going to get out of this.”
When the 30 days were up and it was time to repay the loan, Perez didn’t have the money. So she rolled it over, paying $387 to extend it for another month. She’d done that three times before a North Texas nonprofit came to the rescue. Louise Bland runs the mini loan program at the Society of St. Vincent de Paul.
“So she had paid nearly $1,200 in fees and interest, says Bland. “But she still owed them the $1,500 that she borrowed.”
Perez applied for a mini loan and was approved. Here’s how it worked. The catholic charity paid off her title loan and gave her a new one: 12 monthly payments of $183 at an interest rate of 3 percent.